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Ind ii program design document-pilot program prim pp presentation 08112012 (formatted)

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  • 1. PROPOSED PILOT PROGRAM FOR IMPROVINGPROVINCIAL ROAD MAINTENANCE (PRIM)Program Design08 November 2012
  • 2. Background• Roads are the predominant mode of transport in Indonesia• Sub-national roads comprise 91% of the primary road network in Indonesia• Provincial road 10.2% and Kabupaten/Kota road 80.7%• Investment and maintenance have not kept up with demand – Typically only 51% of sub-national network is in stable condition• Priority tends to be given to new construction/rehabilitation, not (more cost-effective) to maintenance – But more effective asset management is one of 5 key DGH objectives for 2010-2014• Road Traffic and Transport Law 2009 provides for: – Road Preservation Units/Funds – Road Traffic & Transport Forums (RTTFs) – Clarification of asset management responsibilities 2
  • 3. Lessons Learned from InternationalExperience• Maintenance problem is not unique to Indonesia• Trend to improve accountability and ensure sound road management• Move from force account to maintenance by contract• Move towards results based arrangements for implementation – Output based-will be implemented by PRIM – Performance based• Introduce incentives into funding mechanisms 3
  • 4. Lessons Learned from National Experience1. EIRTP-2 (World Bank Project 2006-2011)  13 Provinces and 35 Kabupaten using contestibility  20% Routine maintenance per year doesn’t succeed  Low Fiscal Capacity grant/matching fund (90/10); Medium (60/40); High (30/70)  Reimbursement by contract/MC  Reduce financial gap but not sustainable  13 Indicators and 8 indicators have failed to achieved2. Local Government Decentralized Project /LGDP (WB Project 2011-2013)  6 Provinces and 66 Kabupaten/Kota  Road, Irrigation and water  Verification of Output  Contract and swakelola  RUC too generic3. EINRIP (AusAID 2008-2013)  Only National Roads  Technical and Financial Audit 4
  • 5. Proposed Pilot Program Objectives• Develop and test a pilot grant program using results based disbursements to improve the condition and connectivity of provincial roads• Sustain and improve the condition and connectivity of provincial roads, with emphasis on better value for money;• Strengthen the existing governance arrangements to promote the adoption of more sustainable and efficient maintenance practices;• Build demand for better governance; and• Demonstrate replicability and sustainability of the proposed approach 5
  • 6. Program Design Document• Provide additional funding for maintenance• Focus on results and greater accountability• Outside oversight by the Donor will be reduced,• Establish a program safeguards and clear criteria for success, fostering trust and efficiency.• Financial incentives for good performance• Coordination between agencies and consultation with the public will be improved through the RTTF, under Road Traffic and Transport Law 22/2009 and PP 37/2011.• Application of recent regulations relating to road maintenance, road design and procurement. 6
  • 7. Why Pilot Provincial Roads? Why NTB?• Key connectivity links between national roads and district roads – 10% of network length and 19% of vehicle-km• Provinces have better institutional capacity than districts – Stronger likelihood of successful implementation• NTB has demonstrated strong support and commitment – Budget support – Adoption of Multi years contract – Institutional support and the role of the RTTF – Demonstrated understanding of output-based concepts• Subsequent program extension: – Extend to other provinces when lessons are learned and mechanism is demonstrated to be effective in the pilot program – Consider possible involvement of additional selected LG 7
  • 8. Justification for NTB1 - Weak (major deficiencies and outcomes likely)2 - Moderate (some qualifications)3 - Strong (few or no qualifications) Kupang NTT Tabanan Overall Bali Execution Preparation KLT Planning KLB NTB 0 1 2 3 8
  • 9. Program Description• Component 1a: Payment of an incentive (approximately A$ 52 million) after verified maintenance of provincial roads.• Routine maintenance (through swakelola- force account and contracts)• Periodic maintenance by overlays or regravelling• Rehabilitation of pavements and structures• All programs to include repair or reconstruction of shoulders, roadside and drainage systems• Costs are preliminary and are presently being revised by interim support consultants 9
  • 10. Program Description(cont’d)• Component 1b: Payment of an Institutional development incentive (approximately A$ 2.6 million) for adopting PPBP and improvement RTTF• Component 2: Institutional strengthening, program management support, monitoring and evaluation, and verification of results ($12 million).• Institutional Strengthening ₋ Training of personnel in provincial government road offices ₋ Capacity to plan, program, budget and implement maintenance works; ₋ Improvements to the swakelola system and mentoring of personnel; ₋ Other Training based on Training Need Analyses Study will be carryout by Implementation Consultant 10
  • 11. Program Description(cont’d)• Implementation support (assisted by IndII consultant) ₋ Technical team to be created by DGH ₋ Project Implementation Unit (PIU) to be created in pilot province• Technical verification of maintenance works as a condition for disbursement• Incentive for adopting and implementing adequate PPBP and effective RTTF• Monitoring and evaluation of the pilot program during implementation and for 3 years afterwards• Note: design and supervision is to be the responsibility of the Province, after improvement of skills (design) and remuneration (supervision) 11
  • 12. COST OF PILOT PROGRAM IN NTB• Maintenance Works-5 years program: $143 million: $52 million incentive from AusAID.• Maintenance Works – 2 years (May 2013 to June 2015): $36.96 million: $13.44 million incentive from AusAID and $23.52 million Prov. contribution• Technical Assistance: $12 million from AusAID (five years) of which $5 million will be incurred 2013 up to June 2015• Cost of Design and Supervision estimated $ 4 million is assumed to be met by NTB• Total Cost: $159 million; AusAID: $64 million• Incentive for PPBP/RTTF: 5% of works: $2.6 million• Total Potential Contribution from AusAID: $66.6 million 12
  • 13. Estimated Program and Flow of Grantdisbursements under Component 1a Total Program and Grant Disbursements (A$)million Net Grant Net ProvinceFiscal Year Contribution Contribution Program Implemen. APBD (A$) million (A$) million Disb. Disb. 2013/2 11.25 1.23 0.40 1.63 11.65 2014 19.28 2.15 4.97 7.51 11.77 2015/1 6.04 0.66 4.04 4.70 1.34 Sum 1 36.96 4.03 9.41 13.44 23.52 2015/2 17.67 1.93 0.00 1.93 15.75 2016 35.35 3.86 9.00 12.85 22.49 2017 35.35 3.86 9.00 12.85 22.49 2018/1 17.67 1.93 9.00 10.93 6.75 Sum 2 106.04 11.57 26.99 38.56 67.48 Works 130.00 15.60 36.40 52.00 78.00 + VAT 13.00 0 0 0 13.00 Total 143.00 15.60 36.40 52.00 91.00 Notes: 2015/1 means Semester 1 (January – June) of 2015, the completion date of Phase 1 of the Grant 13
  • 14. Budget allocation & grant disbursement• Program value • 2013- June 2015 • July 2015-2018• Grant contribution • 40% contribution to total program • 60% APBD value• Cash flow • Budget provision (APBD) -Prefinancing 100% until verification and reimbursement is approved • Reimbursement o Advance payment on annual work program value – 30% o Approved work to Verification point (less advance) 14
  • 15. Additional notes1. Assumes 30% advance on total agreed annual program2. Advance deducted in proportion to the amount of annual work program approved.3. Two disbursement dates per year, in May and October4. For programming purposes base year of 2012 and allowance for 5% physical contingency and 5% per annum price contingency, and a 5% provision for mobilisation etc. 15
  • 16. Program composition 2013- June 2015• Routine Maintenance contracts  Length 387 Km and Cost A$ 2.73 million• Routine Maintenance Swakelola  Length 696 Km and Cost A$ 16.31 million• Periodic Maintenance  Length 42 Km and Cost A$ 3.13 million• Rehabilitation  Length 43 Km and Cost A$ 14.79 million• TOTAL PROGRAM A$ 36.96 million 16
  • 17. Program of 7 Contracts for 2013-June 2015 Routine Maintenance Periodic Maintenance Rehabilitation No.ofPackage Name Road Cost Work Work Cost links Cost (A$m) length (A$m) length length (A$m)Rembiga - 3 80 0.57 14 0.87 - 0.49BayanLb Lombok - 2 53 0.22 1 0.15 1 0.55BilukPraya - Kruak 1 21 0.17 12 0.79 - 0.08Sb Pengatap - 2 59 0.54 - 0.15 12 4.46Kuta -PenunjakSumbawa 3 71 0.46 5 0.38 - 0.49BesarSb Kempo - Sp 1 18 0.16 5 0.31 8 1.81KoreTawali - 2 84 0.60 5 0.47 22 6.91Karumbu Totals 14 387 2.73 42 3.13 43 14.79 17
  • 18. Swakelola Program for 2013- June 2015 Routine Maintenance PPK Group Road length Cost (A$m) Lombok Utara 5 km 0.08 Lombok Barat 95 km 2.14 Lombok Tengah 37 km 0.95 Lombok Timur 105 km 1.91 Sumbawa Barat 3 km 0.04 Sumbawa Timur 111 km 2.16 Bima/Dompu 340 km 9.04 Totals 696 km 16.31 18
  • 19. Program composition July 2015-June 2018• Routine Maintenance contracts  Length 771 Km and Cost A$ 8.31 million• Routine Maintenance Swakelola  Length 489 Km and Cost A$ 4.81 million• Periodic Maintenance  Length 273 Km and Cost A$ 14.95 million• Rehabilitation  Length 173 Km and Cost A$ 77.96 million• TOTAL PROGRAM FOR 2015-2018 A$ 106.04 million 19
  • 20. Combined Works Programs, 2015 – 2018 Routine Maintenance Periodic Maintenance RehabilitationNo.of links Road Work Cost Cost (A$m) Work length Cost (A$m) length length (A$m) 31 771 km 8.31 273 km 14.95 173 km 77.96 Routine Maintenance, 2015 – 2018 Contracts and Swakelola Routine Maintenance No.of links Road length Cost (A$m) 23 489 km 4.81 20
  • 21. Identification of the PRIM Network In NTB 21
  • 22. Recommended Treatments 2013 – 2015 22
  • 23. Recommended Treatments 2015 – 2018 23
  • 24. Verification of Results and Disbursement• Output eligibility criteria ₋ Compliance with Program Verification ₋ Compliance with national procurement law and regulations ₋ Compliance with technical specifications ₋ Compliance with environmental and social safeguards• Reference Unit Cost/prices-calculated by specific link, condition, treatment (initial and annual) and length (RUC vs contract price)• Technical Team DGH, Ministry of Public Works undertakes Technical Verification supported by a Verification Consultant• Disbursement:  Advance Payment Disbursement (30% of annual Program)  Implementation Disbursement 24
  • 25. Compliance With Program Verification• Proposed works are entered into the provincial Budget or have a formal Cost Analysis (RAB); the date of approval of all budget documents is noted;• The maintenance budget is announced on a website, including location of works;• The procurement documents for Supervision Consultants specify remuneration at INKINDO rates, as well as the personnel’s minimum salary component. 25
  • 26. Compliance With National Procurement Lawand Regulations• Presence of Integrity Pact• Availability of Minutes of Pre Bid Meeting• Availability of Bid Evaluation Report• Name of the Winner in an official announcement• Any objections are resolved 26
  • 27. Compliance With Technical Specifications• Quality of Routine Maintenance Plan• Visual Assessment• assessment of Routine Maintenance Works• Road pavement thickness, length and width is consistent with contracts• Quality of surface condition and presence defects at visual assessment• Quality and quantity of asphalt and aggregate base/sub base; soil; road shoulders• Bridge repair works consistent with contracts• Physical progress after 25% and 50% of contract time has elapsed• How about non compliance works?? 27
  • 28. Compliance With Environmental and SocialSafeguards• Acceptance of Environmental and Social Safeguard Framework• Fulfilment of environmental monitoring procedure• Implementation of disability provisions in the designs, if applicable 28
  • 29. Risks• Timely availability of annual budget in agreed amounts, where Province has to pre-finance maintenance works• Weak capacity of provincial works department and ineffective coordination• Election year 2013 for Governor• Verification of results• Excess ‘Swakelola’ staff• Capacity of local contractors and consultants• Corruption• Other Risks ₋ Number of Pilot Provinces ₋ Size of Grant ₋ Uncertainity regarding extension of current funding authorisation for IndII and AIIG beyond June 30, 2015 ₋ Availability of additional sources of funding for scaling program ₋ Appointment and funding of design and supervision consultants 29
  • 30. Organisation Chart for Provincial Road Improvement Maintenance/PRIMAustralian-Indonesia Infrastructure Initiative/IndII 30
  • 31. Implementation Schedule for PRIM until June 2015 2012 2013 2014 2015 Jan - Apr May Jun Jul Aug Sept Oct Nov Dec Jan Feb March April May June July August Sept Oct Nov Dec Jan Feb March April May June July August Sept Oct Nov Dec Jan Feb March April May June DFA PMM NPPH SPPH 1st Output MoF 1st MoF 2nd 3rd Output MoF 3rd 4th Output MoF 4th 2nd Output Verification Payment Payment Verification Payment Verification Payment Grant Verification Subsidiary Grant Preparation incl. LG APBN + Agreement Proposal DIPA (AusAID & (IndII, Bappenas, MoF, Tech. (MoF) MoF) Ministry & LG) RKUD RKUD RKUD RKUD (LG) (LG) (LG) (LG) Plan APBD 2013 (LG) Perda for Road Maintenance Program 2013 - 2018 (incl. PRIM) Establish Tech. Team in DGH DGH Technical Team Support ADD/TOR & Procure Interim Support Consultant Establish PIU DPU Program Implementation Unit (PIU) PRIM Swakelola (Force Account) Routine Maintenance Concept Note Detailed Design & BidTechnical Assistance (TA) & LG Activities Document for Multi- years Procure Contractor PRIM Construction Procure Supervision PRIM Supervision Consultant Consultant Road Traffic & Transport Forum (RTTF) PIU Consultant Monitoring & Evaluation ADD / TOR Procure Technical and Financial Assessment Consultant (TFAC) Training & Institutional Strenghtening 31
  • 32. Critical Path Activity By DeadlineGrant Preparation including LG Proposal IndII, Bappenas, MoF, DGH & LG 15 Nov 2012DIPA for APBN MoF 31 Dec 2012DPA for APBD 2013 LG 31 Dec 2012Activity Design Document /ToR IndII & AusAID 30 Nov 2012Procurement and mobilisation of IndII IndII 28 Feb 2013ConsultantSurvey, Prepare Design and Bid Documents IndII Consultant 30 April 2013for Multi-year Contracts 2013-2015Procure Contractors LG 30 June 2013Program Management Manual DGH MPW 30 Nov 2012Direct Funding Agreement AusAID & DGDM MoF 31 March 2013Prepare and Issue SPPH (Surat Penetapan DGFB MoF 31 March 2013Penerusan Hibah)Prepare and Sign PPH (PerjanjianPenerusan DGFB MoF and LG 31 May 2013Hibah) 32
  • 33. Next Steps• Socialization to NTB for on grant condition 14 Nov 2012• Establish TT in DGH and PIU in DPU NTB: November 2012• Program Management Manual Nov 2012• Statement Letter from Governor of NTB concerning 100% Prefinancing prior reimbursement, PERDA Accelleration 2/PRIM, APBD Budget 2013: Nov 2012• PERDA Accelleration 2/PRIM: Nov 2012-April 2013• Procure Preparation and Implementation Project Consultant: December 2012-February 2013• Prepare project implementation: March-June 2013• Start Improved Swakelola: May 2013• Procurement 7 Packages A$ 20.65 million May-June 2013• Finalize direct funding agreement, grant channeling decree/SPPH: Jan - March 2013• On Granting Agreement /PPH: April-May 2013 33